India’s EV Push

India operationalised a concessional 15% import duty for electric vehicles (EVs) under the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). The policy aims to attract global EV manufacturers, but concerns remain over the lack of provisions for technology transfer, crucial for building a competitive domestic EV ecosystem.

India’s EV Push: Opportunity, Gaps, and Global Lessons

India's New EV Manufacturing Scheme

• SPMEPCI Incentives and Conditions: Under the new scheme, global EV manufacturers are allowed to import up to 8,000 completely built units (CBUs) annually at a concessional 15% import duty, provided they invest ?4,150 crore over three years and meet 25% domestic value addition (DVA) in three years, increasing to 50% within five years.
• Complementary Policy Landscape: This policy adds to earlier initiatives like FAME-I (?895 crore) launched in 2015 and FAME-II (?10,000 crore) in 2019, indicating a decade-long push for electric mobility in India, albeit with delayed policy timing compared to global peers.
• Current Limitations: While the SPMEPCI boosts short-term imports and investment, it fails to mandate technology transfer mechanisms, limiting India’s long-term capabilities in core EV technologies such as batteries and power electronics.

Comparative Global Experience

• China's Strategic Advantage: China’s 2009 New Energy Vehicle subsidy programme, coupled with mandatory joint ventures for foreign EV makers until 2022 and $230 billion cumulative incentives, ensured early technology absorption and local capability building.
• S. Approach and Scale: The U.S. initiated its EV policy in 2010 with a $25 billion Advanced Technology Vehicles Manufacturing Loan Program, later amplified under the Inflation Reduction Act, yet EV adoption in 2024 remained at 1.5 million units, far behind China’s 11.3 million.
• Vertical Integration in China: China’s dominance stems from its full-spectrum control over the EV supply chain—from lithium mining to battery assembly, allowing it to price EVs competitively against Internal Combustion Engine (ICE) vehicles.

Strategic Gaps and Way Forward for India

• Need for Battery Technology Access: India currently lacks capabilities in battery chemistry, cell manufacturing, and battery management systems, which are critical to localising EV production beyond just retooling existing ICE components.
• Mandating Joint Ventures as a Policy Tool: India could replicate its earlier ICE local manufacturing model, where foreign OEMs were required to enter joint ventures with local partners, facilitating domestic technology access and skill transfer.
• Towards Open and Competitive EV Market: Gradual transition from protectionism to a globally competitive open market must be designed around tech-sharing mandates, innovation ecosystems, and robust public-private R&D collaboration.

Practice Question:

Q. “India’s electric vehicle (EV) policy is evolving but remains structurally deficient in addressing core technology access.” Critically examine this statement in light of global best practices and recent domestic policy interventions like the SPMEPCI.